New paper by Beate Sjåfjell, Re-embedding the Corporation in Society and on Our Planet: Company Law as a Vehicle for Change (January 13, 2022). Chapter 12 in Beate Sjåfjell, Carol Liao and Aikaterini Argyrou (eds), Innovating Business for Sustainability: Regulatory Approaches in the Anthropocene (Edward Elgar Publishing). Available at SSRN: https://ssrn.com/abstract=4008062
The corporation needs to be ‘re-embedded’ in society and on our planet. Business is an integral element of the disembedding from society, through the way the corporation, a dominant legal form for undertaking business, has been conceptualised in the dominant legal-economic theories. This has formed the basis for and has been exacerbated through the social norm of shareholder primacy. Re-embedding the corporation requires a reconceptualisation of corporation’s role in society and the environment, and challenging a deeply gendered approach not only within business but also within sustainability science. Employing an interdisciplinarity feminist sustainability perspective, I make the case for using company law as a lever to re-embed the corporation through the embedding into the core of company law, key societal concepts of sustainability, drawing on sustainability research. The reform proposals concentrate on EU law but the reform ideas and the basis for them are of global relevance.
Sorry, but I don't buy it. Compare and contrast with D. Gordon Smith, The Dystopian Potential of Corporate Law (March 2007). Univ. of Wisconsin Legal Studies Research Paper No. 1040, Available at SSRN: https://ssrn.com/abstract=976742.
The community of corporate law scholars in the United States is fragmented. One group, heavily influenced by economic analysis of corporations, is exploring the merits of increasing shareholder power vis-a-vis directors. Another group, animated by concern for social justice, is challenging the traditional, shareholder-centric view of corporate law, arguing instead for a model of stakeholder governance. The current disagreement within corporate law is as fundamental as in any area of law, and the debate is more heated than at any time since the New Deal.
This paper is part of a debate on the audacious question, Can Corporate Law Save the World? In the first part of the debate, Professor Kent Greenfield builds on his book, THE FAILURE OF CORPORATE LAW: FUNDAMENTAL FLAWS AND PROGRESSIVE POSSIBILITIES, offering a provocative critique of the status quo and arguing that corporate law matters to issues like the environment, human rights, and the labor question.
In response, Professor Smith contends that corporate law does not matter in the way Professor Greenfield claims. Corporate law is the set of rules that defines the decision making structure of corporations, and reformers like Professor Greenfield have only two options for changing corporate decision making: changing the decision maker or changing the decision rule. More specifically, he focuses on board composition and shareholder primacy. Professor Smith argues that changes in corporate law cannot eradicate poverty or materially change existing distributions of wealth, except by impairing the creation of wealth. Changes in corporate law will not clean the environment. And changes in corporate law will not solve the labor question. Indeed, the only changes in corporate law that will have a substantial effect on such issues are changes that make the world worse, not better.
I stand with Gordon.
